Correlation Between Plaza Centers and B Communications
Can any of the company-specific risk be diversified away by investing in both Plaza Centers and B Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Plaza Centers and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plaza Centers NV and B Communications, you can compare the effects of market volatilities on Plaza Centers and B Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Plaza Centers with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Centers and B Communications.
Diversification Opportunities for Plaza Centers and B Communications
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Plaza and BCOM is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Centers NV and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Plaza Centers is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Plaza Centers NV are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Plaza Centers i.e., Plaza Centers and B Communications go up and down completely randomly.
Pair Corralation between Plaza Centers and B Communications
Assuming the 90 days trading horizon Plaza Centers NV is expected to under-perform the B Communications. But the stock apears to be less risky and, when comparing its historical volatility, Plaza Centers NV is 108.53 times less risky than B Communications. The stock trades about -0.24 of its potential returns per unit of risk. The B Communications is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 132,500 in B Communications on September 3, 2024 and sell it today you would earn a total of 34,500 from holding B Communications or generate 26.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plaza Centers NV vs. B Communications
Performance |
| Timeline |
| Plaza Centers NV |
| B Communications |
Plaza Centers and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plaza Centers and B Communications
The main advantage of trading using opposite Plaza Centers and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Centers position performs unexpectedly, B Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in B Communications will offset losses from the drop in B Communications' long position.| Plaza Centers vs. B Communications | Plaza Centers vs. Clal Biotechnology Industries | Plaza Centers vs. YH Dimri Construction | Plaza Centers vs. Inrom Construction Industries |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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